CBD industry grows in California even as confusion swirls over local, state laws

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Greg Avetisyan and his brother just opened Topikal, a CBD store on the boardwalk in Venice, where they sell a line of CBD pet supplements on Friday, August 31, 2018. The brothers’ Tarzana shop is believed to be the first standalone CBD store in California. They want to expand with a third shop in Orange County.
(Photo by Axel Koester, Contributing Photographer)

Greg Avetisyan and his brother just opened Topikal, a CBD store on the boardwalk in Venice, where he speaks to customers on Friday, August 31, 2018. The brothers’ Tarzana shop is believed to be the first standalone CBD store in California. They want to expand with a third shop in Orange County.
(Photo by Axel Koester, Contributing Photographer)

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Greg Avetisyan and his brother just opened Topikal, a CBD store on the boardwalk in Venice, where he speaks to customers on Friday, August 31, 2018. The brothers’ Tarzana shop is believed to be the first standalone CBD store in California. They want to expand with a third shop in Orange County.
(Photo by Axel Koester, Contributing Photographer)

Greg Avetisyan and his brother just opened Topikal, a CBD store on the boardwalk in Venice, where they sell a line of their own tinctures and lotions on Friday, August 31, 2018. The brothers’ Tarzana shop is believed to be the first standalone CBD store in California. They want to expand with a third shop in Orange County.
(Photo by Axel Koester, Contributing Photographer)

Greg Avetisyan and his brother just opened Topikal, a CBD store on the boardwalk in Venice, where he speaks to customers on Friday, August 31, 2018. The brothers’ Tarzana shop is believed to be the first standalone CBD store in California. They want to expand with a third shop in Orange County.
(Photo by Axel Koester, Contributing Photographer)

Greg Avetisyan and his brother just opened Topikal, a CBD store on the boardwalk in Venice, where he speaks to Kim and Chris Sisson and their dad Jim on Friday, August 31, 2018. The brothers’ Tarzana shop is believed to be the first standalone CBD store in California. They want to expand with a third shop in Orange County.
(Photo by Axel Koester, Contributing Photographer)

Greg Avetisyan and his brother just opened Topikal, a CBD store on the boardwalk in Venice, where he speaks to customers on Friday, August 31, 2018. The brothers’ Tarzana shop is believed to be the first standalone CBD store in California. They want to expand with a third shop in Orange County.
(Photo by Axel Koester, Contributing Photographer)

Greg Avetisyan and his brother just opened Topikal, a CBD store on the boardwalk in Venice, where he speaks to Kim and Chris Sisson and their dad Jim on Friday, August 31, 2018. The brothers’ Tarzana shop is believed to be the first standalone CBD store in California. They want to expand with a third shop in Orange County.
(Photo by Axel Koester, Contributing Photographer)

Kim Sisson and her brother were walking along the Venice Beach Boardwalk, helping their 78-year-old father get some sun, when they spotted a store called Topikal Everything Hemp.

Their dad lives in an assisted living facility in Porter Ranch, suffering from dementia that causes, among other things, anxiety. His doctor at UCLA recommended against using marijuana, which Sisson said her dad, as a younger man, occasionally smoked. But the doctor did give the go-ahead to use CBD, a compound found in the cannabis plant that’s believed to have a number of medical benefits without making people high.

Sisson had seen CBD products online and in smoke shops, and she knows that most dispensaries carry them. But she said the Venice Beach store is the first she’s seen dedicated solely to CBD, with shelves full of infused oils, capsules, bath bombs and creams.

Standalone CBD shops remain rare, but a few have opened in Hesperia, Tarzana and other Southern California communities as word of mouth — backed by scant but growing scientific evidence — spreads about the compound’s potential to ease seizures, calm anxiety and reduce inflammation.

There are also major CBD product manufacturers and distributors in places like Laguna Hills, San Diego and Lake Elsinore.

Marijuana businesses are now heavily taxed and regulated in California since they deal with products that contain THC, a compound that can make consumers high. But businesses that deal in CBD products made from hemp, a strain of cannabis plant with less than 0.3 percent THC, have so far been largely left to their own devices.

The industry is growing despite a number of hurdles, including federal bans, a lack of clarity in California law, and a confusing patchwork of local policies.

The federal government insists that virtually all products derived from cannabis are illegal, with narrow exemptions carved out by the 2014 Farm Bill for hemp that’s cultivated for research. But so far, federal authorities have issued only warnings to CBD businesses that make unsubstantiated health claims, with an acknowledgment that federal authorities are focused on more dangerous substances.

While California’s Bureau of Cannabis Control oversees the marijuana industry, and the federal Department of Food and Agriculture oversees hemp cultivation, hemp-based CBD products aren’t currently regulated by any state agency. To date, the only crackdown from the state has been a July warning against adding hemp-derived CBD to any food products.

Otherwise, CBD vendors don’t need a special state license to set up shop. And, while Topikal and most other stores choose to sell products that have been tested for safety and purity, there aren’t laws that force them to do so.

That’s left most decisions about how and where CBD businesses can operate up to local authority. And those policies are all over the map.

Cities such as Los Angeles, where Topikal Everything Hemp now has two locations, are treating businesses that deal with hemp-derived CBD as they do any other retail or manufacturing operation.

That’s also the rule in Hesperia, where this spring Christopher Malman and his wife opened their store, CBD Wellness Center.

Malman said other cities — including Hesperia, initially — turned them down because they associated the business with marijuana. But after officials in Hesperia did some research, the city granted the Malmans a business license for their CBD store on Main Street.

Hesperia’s cannabis ordinance doesn’t address CBD products made from hemp, according to city spokeswoman Rachel Molina. So, under the current policy, CBD shops are subject to the approval process that applies to all retail businesses. And Molina said they haven’t had any issues since that first shop opened its doors.

But other cities aren’t distinguishing between marijuana and CBD, despite state law clearly delineating the two product categories. Instead, some cities are saying their bans on marijuana businesses also covers retailers hoping to sell CBD products.

In February, city officials in Victorville — next-door to Hesperia — shut down Lisa Carlson’s kiosk, which sold CBD products at the Mall of Victor Valley.

Carlson began using CBD about six years ago to ease the symptoms she experienced as a result of fibromyalgia and other illnesses. The products were so effective, she said, that she wanted to share it with other people. So she got a permit to sell CBD products out of her Adelanto home and at local events under the name Carlson Total Harmony.

Carlson believed she’d been cleared for a business license in Victorville when she set up her kiosk at the mall. But she soon got slapped with a violation notice. And when she went to clear up the licensing issue, city staff told her that, aside from medical marijuana deliveries operated by outside vendors, no commercial cannabis businesses are allowed in Victorville.

She explained the difference between hemp-derived CBD and marijuana to city staff, and she said they were receptive to the information. But they still refused to grant her a license.

“Unfortunately, the cities — first with cannabis and now with hemp — are often clueless,” said Michael Chernis, a Santa Monica-based attorney who works with the cannabis industry. And when cities don’t fully understand an issue, he said, the default response is often to turn the businesses away.

For now, Chernis said there is no state prohibition against selling CBD products derived from hemp as long as the merchant gets the proper local business licenses. And he said there’s no state prohibition against processing CBD products in California, so long as the company gets the hemp from a state such as Colorado or Kentucky where hemp is approved for cultivation and exports.

Chernis expects California at some point will start to regulate hemp-derived CBD products more like marijuana products, requiring some level of testing and licensing. But he doesn’t expect California to follow the path of states such as Ohio, which recently ruled that CBD products can only be sold in licensed medical marijuana dispensaries.

Until there’s some clarity from the state, many other cities are leaving their policies — and any potential CBD business owners — in limbo.

That’s true in Laguna Hills, where Medterra distributes CBD oils and other products out of a facility off Lake Forest Drive.

David Chantarangsu, community development director for Laguna Hills, said the city banned all forms of commercial cannabis two years ago. But the local ordinance was tied to state law, which exempts hemp products.

So, with California still developing final regulations for both the marijuana and hemp industries, Chantarangsu said Laguna Hills’ policy is on hold. And while it’s legal for a CBD business to operate in the city, he added, they’re doing so at their own risk until final rules are in place.

“We’re just looking for certainty so we know what to tell the business owners and my staff.”

None of that has scared off Gary Avetisayn, 24, and his brother, Greg Avetisayn, 26, who own the growing chain of Topikal Everything Hemp stores.

Gary Avetisayn said they were drawn to CBD because they saw how the products helped with his brother’s rheumatoid arthritis. They also didn’t want to open just another dispensary, and they thought hemp-based CBD products didn’t bring the same headaches that come with selling marijuana on the regulated market.

But when they started, CBD wasn’t well known. And in 2016, when they opened their first shop in Tarzana — perhaps the first CBD shop in California — business was slow.

“Honestly, it came to a point where we were kind of hesitant, where we thought maybe this business isn’t going to go for us like we thought it was,” Gary Avetisayn said.

But that changed, and business at the Tarzana shop blew up. He said when they opened their Venice Beach location, in spring, traffic was strong from day one, with most customers looking for relief from arthritis and anxiety.

The brothers now make a line of their own CBD products. And they’re planning to open a third shop somewhere in Orange County.

“We’re learning as we go,” Gary Avetisayn said. But he added, “We’re really glad we took the risk.”

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